There was a post on zero hedge about this recently - the...

There was a post on zero hedge about this recently - the technicals are similarly looking bad for the AUD vs USD - and hence would suggest that AUD gold is rising on that play.

However, they mentioned that this technical situation is somewhat incongruous to the fundamental situation. The USD carry trade is still in effect - with increasingly "so-called" positive news coming out day after day the current mr market call seemingly more and more risk happy. We should expect this trend to continue while the news remains mostly positive.

ON top of this - the reserve bank raised interest rates today. That widens the spread between the two currencies which should only increase the speculative liquidity into our currency.

Given this I can't see the technical situation as indicating anything other than a very short term play until we see some signs of the carry trade reversing. It might happen soon - Zero Hedge seems to think it might. But it might last for years if the US has to keep interest rates this low so as to prevent their economy going into freefall.

When that carry trade does unwind however - boy will their be some money to be made. However, I do wonder if AUD gold will be the way to do it. Last time the USD spiked during the crises, gold didn't drop anywhere near as much as the USD strengthened. But this is likely because of the degree to which gold was serving as a safe haven during the crisis. But the end of the carry trade may not be cause by another crisis - it might be caused simply by the fed being forced to raise interest rates due to strong economic growth. In which case the safe haven aspect of gold won't be in effect and we should expect gold to weaken isomorphically to the USD's rise. Any weakening in the AUD will be offset.

Of course - if it is another crisis, I'm all in. Keep watching the skies for some SIV hedge funds going bust.